Founders at Work.pdf

Stephen Kaufer 365
a typical dot-com business problem: built the product, people liked it, and the
feedback was universally positive, and we got the expansion questions that we
were happy to get, like “When are you going to cover Paris?”—but we just were
not making a dime.
By the middle of 2001, we were getting frustrated. Then September 11
came along, and anything we might have had in the pipeline—not that I
remember it being a particularly interesting pipeline—was stalled, dead. It was
a hugely traumatic time for everyone, especially for the travel industry.
We were also trying to raise a third round of funding, and we were basically
looking at going out of business in 6 to 9 months. It was a little hard to go back
to the existing investors and say, “Hey, pony up more money. We’ve got a great
product. We have no revenue, and we’ve been trying to sell the stuff for a while.
We have no takers. The one company that did license it is generating a couple
hundred dollars a quarter for us. But really, toss in a couple more million,
because it’s a great idea.” It was a tough pitch to make. We made it, and we
actually did raise a small third round—more, I think, from the perspective of
“Look, this is a good product. We’ll figure this out.”
We were 11 people before September 11, and we slimmed down to 8, so
our burn rate was really pretty small. Everyone took salary cuts; we were paying
$18 a square foot for office space; we had really no expenses to speak of. We
were stretching the dollars, and even though it was Internet dot-com days, we
had never done anything remotely lavish.
So we’re approaching late 2001, and we noticed our demo site,
TripAdvisor.com, had started to get some traffic. Just people finding it. We tried
to be active in PR from day one, so we’d gotten some mentions in various press.
I’m not entirely sure how people were finding it—search engines, whatever.
And we certainly weren’t doing anything monetizing the traffic. We thought,
“OK, with 5,000 visitors a day, let’s go run some banner ads, see if we can make
some money that way.”
We tried running a banner ad. We didn’t try to sell it; we just copied
Expedia’s banner ad and put it up on our site. We wanted to see how many
people would click on it. We might have had 3,000 visitors that day and we
might have generated 100 clicks, so maybe it would have been a couple of
dollars to us. So that was just clearly not going to work. But one of our prospects
a couple of months earlier had asked us whether or not we could run ads based
upon the search query. If someone was searching on “Boston,” could we run an
ad for Boston? We explained, “We don’t run ads. That’s not our model. We’re
trying to license you the content.” But it struck us months later that we do have
people that are qualifying themselves to be interested in Boston. In fact, we
have people qualifying themselves to be interested in the Eliot Hotel in Boston,
because they’re reading a review about it. What if we created a link from
TripAdvisor deep to an online travel site like Expedia and had teaser text that
said, “Book a room at the Eliot Hotel in Boston,” and, if the user clicked on that
link, we took them all the way down to the booking page on Expedia? Our
crawler technology knew how to do that, so it was leveraging something we
were pretty good at.